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INDIA'S ENERGY SCENARIO IN 2020

increased dependence on commercial energy sources such as coal, oil, natural gas and electricity.
However, the energy supply system that has developed over the years has tended to depend more and
more on non-renewable energy resources, the availability of which is severely limited. Moreover,
development of some of these energy resources is beset with serious environmental implications. To
some extent, subsidised prices of certain forms of energy also led to end-use inefficiencies and,
therefore, an increase in the gross energy demand. All these factors have raised questions about the
long-term sustainability of such an energy supply system. Moreover, with the rapid increase in demand
for petroleum products, the country has become a heavy importer of oil. The present trends indicate
that in the absence of adequate measures of demand management, the country may have to resort to
import of other forms of energy as well and this has raised issues of long-term energy security of the
country.

4. A number of studies have been so far carried out with reference to the energy sector in India. Some
of these studies were in relation to individual sub-sectors of energy whereas a few were in the nature of
analysing the energy sector scenario in an integrated framework. However, in the earlier studies, the
emphasis was more or less on inter-fuel substitution possibilities and cost optimisation rather than on
demand management with specific reference to the environmental implications. The present paper
places emphasis on the latter aspect i.e. the scope for demand side management and the need for
minimising the adverse impact of energy development on environment. The essential feature of the
approach is to look into the alternatives available for sustainable energy development without in any
way compromising the overall objectives of economic and social development. Before the perspective
of energy demand and supply is discussed, it may be useful to understand the nature of physical
resource endowments of the country and their present status of development.

2. The Primary Energy Resource Endowment

5. India is not endowed with large primary energy reserves in keeping with her large geographical area,
growing population and increasing final energy needs. The current assessment in regard to the primary
commercial energy resources indicates that coal is the major energy resource of the country. The gross
reserves of coal are presently estimated at around 205x109 tonnes. The proven resources of coal are
placed at 73x109 tonnes which are sufficient to last the next century even at an annual level of
production of over 500x106 tonnes. There are some lignite deposits also which are estimated to be
more than 27x109 tonnes. As far as hydrocarbons are concerned, the balance of recoverable reserves
are placed at 732x106 tonnes of crude oil and 660x10 9m 3 of natural gas. The hydro-electric potential
as assessed by the Central Water Commission and the Central Electricity Authority in 1987 is 600 TWh.
The regional distribution of the primary commercial energy resource potential is indicated in Table 1.

6. As may be seen from Table 1, the distribution of primary commercial energy resources is quite
skewed. Whereas the Eastern region accounts for nearly 70% of the total coal reserves, the Western
region has over 70% of the hydrocarbons reserves in the country. Similarly, more than 70% of the total
hydel potential in the country is located in the Northern and the North-Eastern regions put together. The
Southern region, which has only 6% of the coal reserves and 10% of the total hydel potential, has most
of the lignite deposits occurring in the country.

7. In addition, there exists potential for coal bed methane, oil shale and gas hydrates in the country.
Also, as per the Central Electricity Authority, sixty three sites have been identified for development of
pumped storage schemes. The total potential of these schemes adds up to around 94,000 MW. There
exists another 6,780 MW of potential for exploitation through mini/micro hydel schemes. The nuclear
power programme, as per the Eighth Five Year Plan, envisaged having an installed capacity of 10,000
MW.

8. As far as non-commercial or traditional sources are concerned, fuelwood is the major source. The
present estimate of fuelwood use in the household sector is around 160x106 tonnes and accounts for
65% of the total non-commercial energy use in the households. The annual availability of wet dung is
estimated at 960x106 tonnes. The consumption of dung cakes is presently estimated at 80x106 tonnes
on an annual basis. The annual yield of crop residues is placed at around 370x106 tonnes of which
nearly 45x106 tonnes are used in the household sector.

9. Table 2 gives the present assessment of the potential of non-conventional sources of energy and

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their present status of development.

10. Even though the size of primary commercial energy reserves appears fairly large, their availability in
per capita terms is quite moderate on account of the large population of the country. If no significant
additions to reserves are made in the future, the per capita availability is going to decline further in
wake of the rising population. Table 3 gives the details of per capita reserves and the reserve to
production (R/P) ratio of some of the conventional sources of energy as well as the major implications
associated with development of these forms of energy sources.

3. Present Status of Development of Energy Resources

11. Through the process of planned development undertaken over the last five decades, the country
has taken major strides in stepping up the production of primary commercial energy as shown in Table
4. Coal continues to be the main source of primary commercial energy not only for direct energy use in
industry but also for indirect energy use through power generation. Concerted efforts made in
exploration and development of hydrocarbons has led to a significant step up in the production of oil
and natural gas. However, in the recent years, the production of crude oil has been stagnating. The
availability of hydro-electricity has also increased significantly and touched a record generation of 82.71
TWh in 1994-95. There have been additions to nuclear power generation capacity as well as power
generation from nuclear power plants. The wind power generation has also picked up significantly
during the last six years.

4. The Energy Supply Infrastructure

4.1 Electricity Sector

12. Electricity is generated from a number of sources including coal, lignite, natural gas, liquid fuels,
hydel, nuclear and wind energy sources. The installed generation capacity in the utilities has increased
from 1,743 MW in 1950-51, the beginning of the planning era, to 81,171 MW in 1994-95 and further to
84,912 MW by the end of 1996-97, the terminal year of the Eighth Five Year Plan. The gross generation
of electricity in the utilities has increased from 5.3 TWh to 350.5 TWh in 1994-95 and 394.5 TWh in
1996-97. The generation capacity mix presently is 72:25:3 of thermal, hydel and nuclear capacity. The
share of hydel capacity has come down from an all-time high of 50.6% in 1962-63 to 25.5% in 1996-97.
The progress in addition to the electricity generation capacity in the country for a few selected years is
shown in Table 5.

13. In addition to the installed generating capacity of 84,912 MW in the utilities, the non-utilities have
over 12,000 MW of capacity installed with the different power intensive industries for their captive use.
The generation from this capacity was around 42 TWh in 1996-97. Further, the railways also have
about 148 MW of installed capacity with an annual generation of 0.02 TWh. Almost whole of the
capacity available with the non-utilities is thermal, based on either coal or diesel and gas. The changes
in the gross electricity generation from different modes of installed generation capacity in the utilities
since 1950-51 are shown in Table 6.

14. The share of hydel generation has been progressively declining over time in the total generation in
the utilities. Another noticeable feature of the electricity generation is the increasing levels of generation
based on natural gas which has shown an appreciable increase over the 1970-71 level. A small
contribution also has been made in the form of wind energy generation.

4.2 Oil Refineries

15. The first oil refinery in India was set up in Assam at Digboi in the year 1901 with a capacity of
0.5x106 tonnes. This refinery is still in operation. The installed capacity in the refineries sector has
progressively increased over the years and was 61.5x106 tonnes by the end of the year 1996-97. The
crude throughput during that year was 62.82x106 tonnes with a refinery production of 59x106 tonnes.
Nearly 1.6x106 tonnes of LPG was also produced from natural gas in 1996-97. The entire refining
capacity is in the public sector. Trends in the domestic production of petroleum products are shown in
Table 7. Table 8 gives the trends in consumption of petroleum products since 1970-71.



16. It may be seen from Tables 7 and 8 that the country is deficient in middle distillates and the
indigenous production is supplemented through imports. Kerosene oil and high speed diesel oil
constitute bulk of the imports of middle distillates.

5. Changes in the Pattern of Primary Energy Supplies

17. The total primary energy supply (both commercial and non-commercial) increased from 89.6x106
toe (tonnes of oil equivalent) in 1953-54 to about 365x106 toe in 1996-97. The share of non-commercial
fuels has declined from 72% in 1953-54 to about 32% in 1996-97. Fuelwood accounts for nearly 65% of
the total non-commercial energy consumed in the country. Of the indigenous primary commercial
energy production, the relative share of oil and natural gas has increased from 1.2% in 1950-51 to
27.9% in 1996-97 (as compared to nearly 34% in 1989-90). The share of coal which was 98% in 1950-
51 has declined to 67.7% in 1996-97. The changes in the pattern of primary energy supplies are shown
in Table 9.

6. Primary Energy Imports

18. The country is not self-sufficient in oil and oil products. As a result, the import dependence of the
country for oil has been increasing over time. The degree of self-sufficiency in oil which was around
35% in 1975 increased up to 1984-85 and was the highest at 70% during that year. It has started
declining thereafter in wake of the decline in indigenous production of crude oil and rising demand for
petroleum products. In addition to POL imports, there have been imports of superior quality coal for use
in the steel industry. The imports of coal have already touched the 10x106 tonnes mark in 1996-97. A
limited quantity of electricity of around 1.5 TWh per annum is also imported from Bhutan. The changes
in the share of primary energy imports in total primary commercial energy supplies in the country since
1953-54 are given in Table 10.

7. Energy Intensity of the Economy

19. The changes in the primary energy intensity of the economy (defined as primary energy use per unit
of GDP at constant 1989-90 prices) over the years are given in Table 11. As may be seen from Table
11 above, the overall energy intensity of the economy has declined over the years. This has been made
possible by the gradual substitution of primary non-commercial energy sources by the more efficient
commercial energy sources. As a result the primary commercial energy intensity has gone up from 18.3
to 28.53 MJ/US $ during the period 1953 to 1996.

20. The changes in the sectoral final energy consumption are shown in Table 12.

8. Energy Scenario up to the Year 2020

21. The population of the country, which is likely to cross the 970x106 mark by the end of 1998, may
exceed 1315x106 by the end of the year 2019-20. Based on the present trends available in the rate of
urbanisation, the share of urban population is projected to increase from 25.38% in 1990-91 to 43% in
the year 2020. The growth in GDP and its structural changes will have an effect on the demand for
energy and the energy supply mix in future. The GDP, which grew at a rate of 3.5% on an average up
to the 70's, has averaged more than 5.6% per annum growth in the 80's. The GDP grew at the rate of
over 6% per annum during the Seventh Five Year Plan period as against a target of 5% per annum.
The Eighth Plan had set a target of 5.6% per annum growth in GDP and the likely achievement is
projected to exceed well over 6% per annum. It is assumed in the present paper that these trends in
GDP growth are likely to continue in future as well. The high rate of economic growth is likely to be
accompanied by an increasing per capita income and changes in life styles. This will have an effect on
the energy demand as well. In view of the rising awareness in regard to the environmental protection
and conservation, the future growth in energy sector must consider such concerns in order to develop
in a manner which is environmentally benign. The key issues facing a developing country like India
which have energy implications are, therefore, rising population, need for economic growth, access to
adequate commercial energy supplies and the financial resources needed to achieve this, rational
energy pricing regime, improvements in energy efficiency of both the energy supply and consumption,



technological upgradation, a matching R&D base and environmental protection.

22. The scope of the present paper encompasses building up of energy demand scenarios for different
sectors of the economy under various assumptions of changing patterns of energy use, efficiency
improvements, inter-fuel substitution, satisfaction of energy demand for energy services, etc.. The study
is centered primarily around three scenarios; Business as Usual (BAU), Efficiency-Oriented Scenario
(EFF) and Environmentally Constrained Scenario (ENV). The projections under each Scenario take into
account the overall availability of resources and the likely growth in the demand for energy in the
economy. While BAU denotes a Scenario based on the existing trends in the energy sector, EFF
considers the scope for reduction in the energy intensity of the economy, based on end-use efficiency,
inter-fuel substitution and other demand management measures. In the ENV Scenario, the emphasis is
on minimising the adverse environmental implications of the energy system under different sets of
assumption.

8.1 Brief Description of Methodology of Demand Projection

23. The methodology adopted for estimating the long term energy demand is based primarily on the
DEFENDUS approach developed by Prof. A.K.N. Reddy and his associates but with certain
modifications carried out by the authors. The methodology involves generating sectoral energy
accounts for different fuels and analysing the effect of various assumptions made in regard to the
estimation of demand, inter-fuel substitution possibilities, improvements in efficiencies, CO2 emission,
etc.. The base year chosen for projecting the long-term energy demand is 1989-90.

8.2 Estimates of Energy Requirement up to the Year 2020

24. The total energy demand by sectors in the three scenarios is given in Table 13. Table 14 gives the
share of different energy sources in the total consumption requirement in different sectors of the
economy. As may be seen from Table 14, there are major changes taking place in the requirement of
petroleum products, electricity and fuelwood in the final energy demand over the years in the three
scenarios. The changes in the percentage share of various fuels, both commercial and non-
commercial, in the final energy consumption pattern are given in Table 15.

8.3 Changes in Energy Intensity of the Economy

25. The energy intensity of the economy shows a marked decline over the years in the three scenarios
on account of the effect of the efficiency measures adopted and the inter-fuel substitution possibilities
taken into consideration. A comparative picture of the changes in the primary energy intensity in the
three scenarios is shown in Table 16.

26. The primary non-commercial energy intensity shows a marked decline as compared to the changes
in the primary commercial energy intensity. The primary commercial energy intensity increases in the
BAU Scenario over the three terminal years considered as compared to the base year but a decline is
observed in the EFF and ENV Scenarios. It will be interesting to see the changes in the final energy
consumption-GDP intensity in the three scenarios. These changes are shown in Table 17.

27. The major changes in the final energy intensity w.r.t. GDP are seen in the case of transport and the
household sectors. A further analysis brings out the changes in the efficiency of energy use in these
sectors for different activities, in particular the freight movement in the transport sector and cooking in
the household sector, on account of the various measures assumed in estimating the demand for final
energy consumption in these sectors. Table 18 shows the increase in efficiency of energy use in freight
transport due to the effect of the measures adopted for this purpose which include not only an increase
in the efficiency of the transport modes but also a modal shift in the freight movement. A higher share of
rail transport is assumed progressively over time so as to reach a level of 67% in a period of 20 years
from the base year, to be in line with such a recommendation being made in this regard by a number of
expert committees and groups set up in the past. The effect of these measures is evident as the energy
intensity of freight movement shows a considerable decline in the ENV Scenario. The estimated norm
of energy consumption requirement per tonne kilometer in the ENV Scenario in the year 2019-20 is
almost 42% lower as compared to the estimated norm for the same year in the BAU Scenario.



28. The efficiency of energy use for cooking in the household sector also shows a marked improvement
in the ENV Scenario as compared to the one observed in case of the BAU Scenario. The requirement
of per capita gross energy input to meet fully the useful per capita energy requirement in the ENV
Scenario in the year 2019-20 is 55% less than the requirement in the BAU Scenario in the same year.
There is a consequential increase in the efficiency of energy use for cooking which goes up from a
mere 11.5% in the year 2019-20 in the BAU Scenario to 25.5% in the ENV Scenario. Table 19 shows a
comparative picture of efficiency of energy use in cooking in the household sector for the three terminal
years for all the scenarios.

29. The changes in the efficiency of the cooking system as shown in Table 19 are brought about by the
increasing use of more efficient commercial energy sources as well as an increase in the efficiency of
use of non-commercial energy sources. This results in a large saving of fuelwood which is extremely
important from point of view of preventing large scale deforestation taking place presently on account of
indiscriminate mining of fuelwood. The changes in the requirement of fuelwood over the years in the
three scenarios are shown in Table 20.

30. As may be seen from Table 20, the requirement of fuelwood declines from 338.1x106 tonnes in
2019-20 in the BAU Scenario to 84.7x106 tonnes in the ENV Scenario. Efforts need to be made to bring
down the use of fuelwood further in the household sector since the level of demand estimated in the
ENV Scenario is still higher than what can be maintained in a sustained manner for preventing any loss
to the forest cover stipulated at around 33% of the total land area of the country.

8.4 Energy Import Requirements

31. The requirement of energy imports will depend on the extent to which the primary energy needs of
the economy are met through indigenous production. As far as indigenous production of primary energy
is concerned, the production profile for the year 1999-00 is assumed on the basis of the present trends
and what is considered feasible within the time span under consideration. In case of the years 2009-10
and 2019-20, the production of various forms of primary energy particularly coal and primary electricity
is assumed on the basis of the growth achieved in the respective sectors during the period 1979-89.
Based on the balance of recoverable reserves of hydrocarbons, the production of crude oil and natural
gas in future is projected to increase at a slow rate. The production of crude oil, which is likely to be
40x106 tonnes in the year 1999-00, is projected to increase to 45x106 tonnes in 2009-10 and further to
50x106 tonnes in 2019-20. The production of natural gas is projected to increase by 109m3 every year
over the level of production in the year 1996-97. The oil refining capacity, which is likely to go up to
80x106 tonnes in the year 1999-00, is estimated to increase to 230x106 tonnes in 2019-20. The
generation from hydel and nuclear capacity is assumed at plant load factor of 40% and 60%
respectively for the period 1999-2019. These assumptions are summarised in Table 21.

32. In wake of the limited primary energy resource endowments of oil and natural gas and the
increasing demand for petroleum products in the final energy consumption, dependence on energy
imports is going to increase as is brought out in the estimates of energy demand as projected in the
BAU Scenario. The assumptions made in the EFF and ENV Scenarios indicate a lower energy demand
for final consumption and consequently less of imports. The impact of the measures adopted in the EFF
and ENV Scenarios on energy imports is shown in Table 22.

33. The impact of the measures adopted in the EFF and ENV Scenarios is evident from Table 22.
Whereas the indigenous coal production as projected in the BAU Scenario is not sufficient to meet the
overall coal requirement in the country in any of the terminal years, there results a progressively large
surplus of coal in the EFF and ENV Scenarios. Alternatively, the indigenous production requirement of
coal come down to that extent. As far as import of coal is concerned, this is presently limited to import
of some superior quality coal for use in steel industry. It is assumed that the coal imports will continue to
be made in the future as well and may go up to 10x106 tonnes in 1999-00, 15x106 tonnes in 2009-10
and 20x106 tonnes in 2019-20 to supplement the indigenous coking coal production for meeting the
requirements of the steel industry in these years. This would result in a further reduction in the
indigenous production of coal. Taking this into consideration, the import scenario changes to the extent
as shown in Table 23.



34. Based on Table 23, the share of energy imports in the total primary commercial energy supply in
the economy is projected to go up steadily from 16.24% in the base year 1989-90 to 37.82% in 2019-20
in the BAU Scenario. Even though the measures adopted in the EFF and the ENV Scenarios reduce
the demand for primary energy to a large extent, the country would still need to import 33.46% of the
total primary commercial energy requirement in 2019-20 in the ENV Scenario. The increase in the
share of energy imports in primary commercial energy supply is mostly on account of increase in the
demand for oil products and low indigenous production of crude oil in the coming years. The self-
sufficiency in oil, which was nearly 59% in 1989-90 is projected to fall sharply to less than 13% in 2019-
20. The economy will thus become dependent on energy imports and the vagaries of the international
market. The balance of payments, which is already in the negative, will become more so if no concrete
steps are taken to reduce energy consumption in the coming years.

35. The value of net imports is estimated in terms of 1989-90 US dollars and is given in Table 24. The
value of net imports in the BAU Scenario increases at a rapid pace and goes up from US $3674.6x106
in 1989-90 to US $9,385x106 in 1999-00 and further to US $61,843x106 in 2019-20. The value of net
imports in the ENV Scenario comes down appreciably from US $9,385x106 to US $6,994x106 in 1999-
00 and from US $61,843x106 to US $39,563x106 in 2019-20. The major share of the energy import bill
will continue to be accounted for by the import of oil and oil products. The share of oil and oil products
in the total energy import bill is projected to increase from 92.3% in 1989-90 to 97.2% in 2019-20 in the
ENV Scenario.

36. The share of energy imports as a percentage of total exports in 1989-90 was 22.1%. If the exports
continue to increase at the rate of 10% per annum in the period 1989-2019, the share of energy imports
as a percentage of total exports will continue to remain more or less the same, being 21.3% in the year
2019-20 in the BAU Scenario. However, in the ENV Scenario, the share of energy imports as a
percentage of total exports comes down to 13.6% in the year 2019-20. This underlines the need for
efforts to be made for increasing exports on a sustained basis.

9. Cost-Benefit Analysis of Renewable Energy Development - Case of Hydel Power

37. Energy is a capital intensive sector and presently accounts for a little less than 30% of the plan
expenditure in the public sector. Keeping in view the increase in demand for energy as projected in the
different scenarios considered and the rising costs of creating new capacities, the investment
requirements of the sector would increase accordingly. There are also adverse environmental impacts
associated with energy production and consumption. This will call for an energy development strategy
which is environmentally friendly and is sustainable in the long run. Moreover, in view of the depleting
nature of the fossil fuels, greater attention is now being paid for developing renewable and non-
conventional energy sources which are more environmentally benign. Such an energy development
may result in less of GHG emissions but will have costs involved which will have to be borne by the
economy and the consumers. An attempt has been made in the paper to ascertain the magnitude of
investment required for development of power sector to meet fully the demand for electricity as
projected in the different scenarios up to the year 2019-20. The results of the cost-benefit analysis of
development of a renewable energy resource like hydro power are presented in the following
paragraphs.

38. The gross electricity generation requirements are worked out after taking into consideration the
changes in various technical parameters like transmission & distribution losses, plant load factors,
auxiliary losses, heat rates of thermal plants, etc. Table 25 gives the gross electricity generation
requirement for the different terminal years for the three scenarios.

39. The various options considered for power generation are listed below.

(i) Coal Thermal
(ii) Gas Combined Cycle
(iii) Gas Open Cycle
(iv) Hydel
(v) Nuclear*
(vi) Fuel oil
(vii) Biogas diesel
(viii) Wind
(ix) Solar



* The nuclear option has not been considered while working out the least cost options. The capacity
levels and the generation levels are taken as given.

40. In addition, some options that will result in savings of power are also considered viz. efficient
pumpsets in the farm sector, solar water-heaters replacing electric water heaters and efficient lighting
systems (mainly CFLs) replacing the inefficient ones. The cost of such a replacement has also been
included while estimating the financial savings that are going to arise out of lower electricity demand.

41. Based on various assumptions regarding capital costs, O&M costs, gestation lags, plant load
factors and the fuel cost, the life cycle cost for each of these options has been worked out and is given
below.

Options Cost (US cents/KWh)
Coal Thermal 6.433
Gas Combined Cycle 6.475
Gas Open Cycle 11.815
Hydel 9.334
Fuel oil 8.823
Biogas diesel 9.268
Wind 14.013
Solar 59.889

42. Given such a cost scenario, the gas open cycle option was dropped while estimating the least cost
option for power sector. It has been assumed that the gas will be used only in combined cycle plants.
With the exception of availability of coal, bounds on availability of different resources for the use in the
power sector have been fixed for other options for all the terminal years. For hydro-electricity
availability, two scenarios have been considered viz. lower and higher. Based on the life cycle cost
mentioned above and the feasible generation from other options (depending on the availability of
resources), the generation mix for the electricity sector has been worked out for each of the terminal
year considered in the exercise for different demand scenarios viz. BAU, EFF and the ENV scenarios.
The investment requirements have also been worked out. While estimating the investment
requirements, it is assumed that investment on transmission and distribution will be 70% of the
investment requirement for setting up installed generating capacity.

43. For each terminal year, two scenarios have been considered under ENV. These are ENV1 and
ENV2. Under ENV1, the options are chosen (subject to assumptions about availability of resources) in
the order of cost ranking. In ENV2, the options are chosen on the basis of emissions i.e. the option with
the least emissions per KWh of electricity generated is picked up first. In this option greater share of
hydel potential is realised than in ENV1. Obviously, in the second case the cost per KWh as well as the
investment requirement per KWh would be higher.

44. The ENV scenarios considered in the preceding paragraph take into account a somewhat modest
rate of addition of hydro-electric capacity, keeping in view the time and investment constraints.
However, considering the large hydro potential that the country is endowed with, it should be possible
to step up the rate of hydro power development, provided commensurate investments could be made.
Such a scenario has considerable importance in the Indian context as it will reduce excessive
dependence on coal and contain the total emissions. The accelerated hydro development (AHD)
scenario assumes 75% development of the total hydro-electric potential by the year 2019-20.

45. Table 26 summarise the significant results that have emerged from this exercise for the year 2019-
20. The installed capacity requirements in the BAU for the year 2019-20 increase to 384,145 MW. The
investment requirement to meet this demand is likely to be US $ 867x109 (at 1989-90 prices and the
exchange rate prevailing then). The share of steam generation in the total generation is estimated to be
82.5% requiring about 1175x106 tonnes of coal. The reduction in demand in EFF scenario by 11.8% vis-
a-vis BAU scenario reduces the capacity requirement by 45,395 MW and the investment requirement
by US$ 95x109. However, the cost/KWh increases because greater share of demand is met from hydel



sources (which is costly). The CO2 emissions decline by nearly 220x106 tonnes and the requirement of
coal by 146x106 tonnes. Similar picture emerges in ENV scenario where there is reduction in capacity
requirement, investment requirement, coal requirement and CO2 emissions. However, the cost of
generation per KWh increases. A comparison of ENV1 and ENV2 Scenarios shows interesting results.
The demand is the same in the two scenarios and yet the capacity requirement, investment
requirement and the cost per KWh is lower in ENV1 than in ENV2. On the other hand, share of steam
generation, requirement of coal, total CO2 emissions as well as CO2 emission/KWh are lower in ENV2.
This clearly brings out the fact that reducing the emissions have cost attached to it.

46. A reduction in the share of steam generation from 82.5% in BAU to 59.3% in AHD Scenario
increases the average cost per KWh of electricity generation from 6.77 cents to 7.41 cents. It reduces
the CO2 emissions from electricity generation from 1,887x106 tonnes to 1,112x106 tonnes. It is on
account of combination of various factors viz reduced overall demand, greater utilisation of hydel share,
limited substitution by wind and solar based energy etc.. To meet the same demand, a higher share of
steam generation compared to hydro is associated with lower cost but greater demand for coal and
higher CO2 emissions. The trade-off is clear.

10. Conclusions

47. If the process of energy development is allowed to proceed along the lines of BAU, the supply-
demand gap in the energy sector is likely to widen to such an extent that a very substantial proportion
of the country's export earnings will have to finance the energy import bill in the coming decades. In the
long run, this is evidently unsustainable. In particular, BAU implies a substantial increase in electricity
demand that is difficult to sustain entirely on the basis of indigenous resources of coal and hydro-
electricity that could be developed within the time frame of this study. As a result, the country may have
to import not only oil but also coal in large quantities if the steeply increasing demand for electricity is to
be fully met. Another important aspect of BAU is that the supply-demand gap in case of traditional fuels
will also increase to such an extent that the fuelwood requirements will far exceed the rate at which
fuelwood is regenerated. This will have serious implications for the environment. Finally, in this
scenario, the total emissions will be the highest. Apart from the impact it will have on local environment,
it could have serious global environmental implications.

48. In the second scenario viz EFF, some efficiency improvements are considered. In the time frame
that is considered in this study i.e. up to the year 2019-20, EFF has the effect of significantly reducing
the demand for almost all forms of energy, especially coal. The gap between supply and demand for
commercial fuels assumes a much less serious proportion, leading to an energy import bill that could be
contained within the likely export earnings of the country to a much greater extent. In this scenario, the
pressure on fuelwood will also be much less compared to BAU. The total emissions show an
impressive reduction and the emissions per unit energy consumption will also be less. In the electricity
sector, EFF involves lesser capital investment but a marginally higher unit cost of electricity generation.

49. In ENV, greater efficiency/inter-fuel substitution possibilities are considered. In analysing the
implications, two variants of ENV are further examined for the purpose of ranking the various options in
electricity sector. In the first variant, i.e. ENV-1, the various options are ranked according to the costs
involved for per unit electricity generation. In the second variant i.e. ENV-2, ranking is done on the basis
of their implications from the point of view of emissions. There is also a third scenario considered in
ENV and it is based on Accelerated Hydro Development (AHD).

50. The ENV variants generally bring down the demand for all forms of energy, especially electricity,
coal, oil and fuelwood. This in turn reduces the pressure on foreign exchange resources of the country,
apart from reducing the strain on biomass resources.

51. ENV-1 results in substantial savings in investment in electricity sector but would result in a further
marginal increase in the unit cost of electricity. In this scenario, the total as well as the unit emission
levels decline further.

52. ENV-2 results in savings in investment in electricity sector compared to BAU/EFF, but not to the
same extent as in ENV-1. In this scenario, the unit cost of electricity is slightly higher compared to ENV-
1. This scenario significantly reduces both total and unit emissions. The main feature of this scenario is
the significant reduction that will take place in the requirement of coal.



53. In the AHD scenario, the requirement of coal and, consequently, the emission levels are reduced in
the terminal year 2019-20. But this will call for much higher investments during the referred time frame.

54. The policy implications of these scenarios are self-evident. From the point of view of long term
sustainability, the country can ill-afford an energy development scenario that places considerable strain
on its resources. There are explicit advantages in the three ENV scenarios, especially ENV-2 and AHD
that provide much greater benefits from the point of view of the environment. However, to proceed
along this path, substantial investments are necessary for which suitable mechanism needs to be
evolved for mobilising resources.

55. The shift in the pattern of supply and demand for energy from BAU to either EFF or ENV (ENV-1,
ENV-2 and AHD) can take place only if an effort is made to consciously initiate appropriate pricing and
investment policies at the earliest and pursue the relevant scenario on the basis of a well-defined
strategy.

This paper is based on the country study entitled `Environmentally Constrained Alternative Energy
Scenarios' prepared by the authors in April 1997 for Asia and Pacific Development Centre, Kuala
Lumpur, Malaysia under the Programme on Asian Co-operation in Environment and Energy (PACE-E)
of the UNDP. The views expressed in this paper are authors' own and not of the organisations they
serve or of the Government of India. Year taken in this paper is the financial year. For example, the
year 1950-51 represents the period between April 1, 1950 and March 31, 1951. Year 1989-90 is taken
as the base year. The exchange rate for this year is 1 US $ = Rs. 16.649.

Table 1: Regional Distribution of Primary Commercial Energy Reserves

Region/Resource Coal (109t) Lignite (109t) Crude oil (106t) Nat. Gas (109m3) Hydro(TWh)
Northern 1.1 1.1 - 4 225.0
Western 48.2 0.5 584 497 31.4
Southern 13.1 25.9 - - 61.8
Eastern 141.4 - - - 42.5
North-Eastern 0.9 - 148 159 239.3
Total 204.7 27.5 732 660 600.0

Sources : Fourth National Power Plan 1997-2012, March 1997, Central Electricity Authority.
Petroleum & Natural Gas Statistics, 1994-95, Ministry of Petroleum & Nat. Gas
Annual Report 1996-97, Ministry of Coal.

Table 2: Renewable Energy Potential

Source/Technology Potential/Availability Potential Exploited
Biogas Plants 12x106 2.7x106
Biomass-based power 17,000 MW 69.5 MW
Efficient Woodstoves 120x106 20x106
Solar Energy 5x1015 Whr/yr 25 MW
Small hydro 10,000 MW 250 MW
Wind Energy 20,000 MW 1,000 MW
Ocean Thermal 50,000 MW Nil

file:///C|/Documents%20and%20Settings/jayaramanc...ency/INDIA'S%20ENERGY%20SCENARIO%20IN%202020.htm (10 of 19)9/3/2007 4:45:26 PM


Sea Wave Power 20,000 MW Nil
Tidal Power 9,000 MW Nil

Source: Annual Report 1996-97, Ministry of Non-conventional Energy Sources

Table 3: Per Capita Availability of Conventional Energy Resources

Resource Availability R/P Ratio Implications
Total Per capita
Coal 73x109 t 76 t 90 Moderately high R/P, Land degradation/
Resettlement constraints/ Need for Large Imports
Soon
Oil 727x106 t 0.75 t 21 Low R/P, Large Imports Necessary
Gas 660x109m3 688 cm3 30 Low R/P, Large Imports Necessary
Hydro 600 TWH 625 KWh - Large Untapped Potential, Environmental,
Resettlement Constraints, Need for Large
Investments
Nuclear 350,000 Mwe* - Large Potential, Technology / Safety Issues and
Need for Large Investments

*Including Thorium Resources

Table 4: Trends in Production of Primary Commercial Energy

Units Production
1950-51 1960-61 1970-71 1980-81 1990-91 1996-97*
Coal 106t 33 55.67 72.95 114.01 211.73 288.65
Lignite 106t - 0.05 3.39 4.80 14.07 22.54
Crude Oil 106t 0.26 0.45 6.82 10.51 33.02 33.87
Natural Gas 106m3 - - 1445 2358 17998 22890
Hydro Power TWh 2.52 7.84 25.25 46.54 71.66 68.63
Nuclear Power TWh - - 2.42 3.00 6.14 9.01
Wind Power TWh - - - - 0.03 0.85

*Provisional

Table 5: Progress in Addition to Installed Generating Capacity in Utilities (MW)

Year Hydro Steam Diesel Gas Nuclear Wind Total
1950-51 563 1028 152 - - - 1743
1960-61 1917 2436 300 - - - 4653
1970-71 6383 7508 230 168 420 - 14709
1980-81 11791 17122 167 274 860 - 30214
1990-91 18753 43004 182 2552 1565 30 66086



1994-95 20833 52139 302 5632 2225 40 81171

Source: General Review, Public Electricity Supply, All India Statistics, 1994-95, CEA

Table 6: Changes in the Pattern of Gross Electricity Generation in Utilities (TWh)

Year Hydro Steam Diesel Gas Nuclear Wind Total
1950-51 2.60 2.69 - - - - 5.29
1960-61 7.84 8.73 0.37 - - - 16.94
1970-71 25.25 27.80 0.11 0.25 2.42 - 55.83
1980-81 46.54 60.71 0.06 0.52 3.00 - 110.84
1990-91 71.64 178.32 0.08 8.11 6.14 0.03 264.32
1994-95 82.71 243.11 0.50 18.47 5.65 0.05 350.49

Source: General Review, Public Electricity Supply, All India Statistics, 1994-95, CEA

Table 7: Trends in Domestic Production of Petroleum Products (106 Tonnes)

Year 1970-71 1975-76 1980-81 1985-86 1990-91 1996-97
Light Distillates 3.0 3.6 4.1 8.6 10.9 14.3
Middle Distillates 8.6 10.8 12.1 21.6 27.0 32.1
Heavy Ends 5.5 6.4 7.9 10.0 12.2 14.2
Total 17.1 20.8 24.1 40.2 49.5 60.6

Note: Production of light distillates includes LPG production from natural gas
Source: Indian Petroleum & Natural Gas Statistics, 1994-95.

Table 8: Trends in Consumption of Refined Petroleum Products (106 Tonnes)

Year 1970-71 1975-76 1980-81 1985-86 1990-91 1996-97
Light Distillates 2.7 3.6 4.4 6.8 9.8 14.6
Middle Distillates 9.0 11.7 17.1 29.7 33.1 49.2
Heavy Ends 6.2 7.2 9.5 10.1 12.1 15.4
Total 17.9 22.5 31.0 40.9 55.0 79.2

Source : Indian Petroleum & Natural Gas Statistics, 1994-95.

Table 9:Changes in the Pattern of Primary Energy Supply (106 toe)

Production
1953-54 1960-61 1970-71 1980-81 1990-91 1996-97
Commercial Primary Energy

Coal 23.62 35.64 36.48 56.96 94.68 124.09



Lignite - 0.01 0.81 1.23 3.34 6.05
Crude Oil 0.19 0.46 7.01 10.79 33.92 34.78
Natural Gas - - 0.60 1.41 11.73 18.89
Hydro Power 0.24 0.67 2.17 4.00 6.16 5.90
Nuclear Power - - 0.63 0.78 1.60 2.35
Wind Power - - - - - 0.07
Total 24.05 36.78 47.67 75.19 151.43 192.13
Net Imports (+) 2.20 6.04 12.66 24.63 31.69 62.29
St. Changes (-) 0.24 2.87 0.69 3.80 5.37 7.83
Intl. Bunkers (-) 0.53 0.50 0.24 0.21 0.14 0.16
Total Commercial Energy Supply

25.48 39.45 59.40 95.81 177.61 246.43
Non-Commercial Primary Energy Supply

64.13 74.38 86.72 105.86 118.80 118.80
Total Primary Energy Supply

89.61 113.83 146.12 201.67 296.41 365.23

Table 10: Share of Net Imports of Energy in Primary Commercial Energy Supply (%)

Year Coal POL Electricity Total
1953-54 (-)5.02 13.65 - 8.63
1960-61 (-)2.08 17.39 - 15.31
1970-71 (-)0.40 21.71 - 21.31
1980-81 0.25 25.45 - 25.70
1990-91 2.22 15.56 0.07 17.85
1996-97 2.83 22.40 0.05 25.28

Table 11: Changes in Overall Primary Energy Intensities w.r.t. GDP (MJ/US $)

1953-54 1960-61 1970-71 1980-81 1990-91 1996-97
Non-Commercial 46.04 40.63 32.96 29.71 19.23 13.75
Commercial 18.30 21.55 22.57 26.89 28.75 28.53
Total 64.34 62.18 55.53 56.60 47.98 42.28

Table 12: Source-wise Consumption of Final Energy (1015 J)

Year Non-commercial Energy Commercial Energy
Fuel- Dung- Agro- Total Coal & Pet. NaturalGas Electricity Total
wood cake Waste Lignite Product
1953-54 1700 466 519 2685 683 142 - 27 852



1960-61 1968 543 603 3114 952 252 - 61 1265
1970-71 2345 653 633 3631 1070 649 12 175 1906
1980-81 2864 794 774 4432 1444 1212 33 323 3011
1990-91 3210 890 874 4974 1827 2218 283 762 5090
1996-97 3210 890 874 4974 1967 3256 427 1168 6818

Table 13: Sectoral Energy Requirement in Different Scenarios (1015 J)

Year Sector of Consumption Total Demand
Household Commercial Industry Transport Agriculture Others
1989 5488 54 2062 1005 393 725 9727
1999 BAU 8094 458 3128 1958 692 1046 15377
EFF 6156 424 3063 1777 599 1034 13054
ENV 5644 428 3063 1642 531 1034 12342
2009 BAU 10141 665 5310 4564 1152 1625 23457
EFF 6631 530 5164 3649 967 1595 18536
ENV 5161 560 5164 3198 824 1595 16502
2019 BAU 12584 1077 9436 11252 1947 2811 39107
EFF 8499 860 9318 7896 1714 2703 30991
ENV 5959 908 9318 6974 1565 2704 27429

Table 14: Changes in the Pattern of Final Energy Requirement by Sources (1015 J)

Year Commercial Energy Non-Commercial Total Demand
Coal & Petr. Product Natural Gas Electricity Fuelwood Others
Lignite
1989 1652 2174 289 702 3142 1768 9727
1999 BAU 2267 3573 534 1570 4710 2723 15377
EFF 2267 3330 534 1391 3398 2133 13054
ENV 2267 3213 534 1295 2965 2067 12342
2009 BAU 3704 7064 742 3124 5722 3101 23457
EFF 3704 6033 742 2708 3296 2052 18536
ENV 3704 5761 742 2415 1986 1893 16502
2019 BAU 6444 15551 950 5965 6723 3474 39107
EFF 6444 12056 950 5407 3842 2292 30991
ENV 6444 11505 950 4771 1685 2074 27429

Table 15: Changes in the Pattern of Fuel Consumption in the BAU, EFF and ENV Scenarios(%)

Year Commercial Energy Non-Commercial Total Demand



Coal & Petr. Product Natural Gas Electricity Fuelwood Others
Lignite
1989 17.0 22.3 3.0 7.2 32.3 18.2 100
1999 BAU 14.7 23.2 3.5 10.2 30.6 17.8 100
EFF 17.4 25.5 4.1 10.7 26.0 16.3 100
ENV 18.4 26.0 4.3 10.5 24.0 16.8 100
2009 BAU 15.8 30.1 3.2 13.3 24.4 13.2 100
EFF 20.0 32.5 4.0 14.6 17.8 11.1 100
ENV 22.4 34.9 4.5 14.6 12.0 11.6 100
2019 BAU 16.5 39.8 2.4 15.2 17.2 8.9 100
EFF 20.8 38.9 3.1 17.4 12.4 7.4 100
ENV 23.5 41.9 3.5 17.4 6.1 7.6 100

Table 16: Changes in the Primary Energy Intensity of the Economy (MJ/US $)

Year Commercial Non-Commercial Total
1989 28.7 20.0 48.7

1999 BAU 28.6 16.9 45.5
EFF 26.3 12.6 38.9
ENV 25.1 11.4 36.5

2009 BAU 30.2 11.2 41.4
EFF 25.9 6.8 32.7
ENV 23.9 4.9 28.8

2019 BAU 32.5 7.2 39.7
EFF 27.1 4.4 31.5
ENV 24.9 2.7 27.6

Table 17: Changes in the Final Energy Consumption Intensity (MJ/US$)

Year Sector of Consumption Total
Household Commercial Industry Transport Agriculture Others
1989 22.4 0.2 8.4 4.1 1.6 2.9 39.6

1999 BAU 18.4 1.0 7.1 4.5 1.6 2.4 35.0
EFF 14.0 1.0 7.0 4.0 1.4 2.3 29.7
ENV 12.8 1.0 7.0 3.7 1.2 2.4 28.1



2009 BAU 12.9 0.8 6.7 5.8 1.5 2.1 29.8
EFF 8.4 0.7 6.6 4.6 1.2 2.0 23.5
ENV 6.6 0.7 6.6 4.1 1.0 2.0 21.0

2019 BAU 8.9 0.8 6.7 8.0 1.4 2.0 27.8
EFF 6.0 0.6 6.6 5.6 1.2 2.0 22.0
ENV 4.2 0.7 6.6 5.0 >1.1 1.9 19.5

Table 18: Energy Intensity of Freight Traffic

1989-90 1999-00 2009-10 2019-20
Freight Traffic (109 tkm) 537.89 960.73 1715.94 3064.81
Energy Intensity (MJ/tkm) 0.7306
BAU Energy Requirement (PJ) 669.13 1279.47 2466.45
Energy Intensity (MJ/tkm) 0.6965 0.7456 0.8048
EFF Energy Requirement (PJ) 662.82 1248.97 2336.58
ENV Energy Requirement (PJ) 528.38 797.63 1415.38

Table 19: Efficiency of Energy Use in Household Sector for Cooking

1989-90 1999-00 2009-10 2019-20
Per Capita Useful Energy Req. (MJ) 740.5 815.3 883.2 925.9
BAU Scenario

Per Capita Gross Energy Req. (MJ) 7693.9 8000.9 8054.0
Efficiency of Energy Use (%) 10.6 11.0 11.5
EFF Scenario

ENV Scenario


Table 20: Changes in the Requirement of Fuelwood (106 tonnes)

1989-90 1999-00 2009-10 2019-20
BAU Scenario 158.0 236.8 287.7 338.1
EFF Scenario 158.0 170.9 165.7 193.2



ENV Scenario 158.0 149.1 99.8 84.7

Table 21: Assumptions for Indigenous Primary Energy Production in BAU Scenario

1989-90 1999-00 2009-10 2019-20
Hydro Power Capacity (MW) 18311 25235 32158 39082
Nuclear Power Capacity (MW) 1565 2620 4105 10000
Wind Power Generation (GWh) 6 310 920 2730
Solar Power Generation (GWh) - 50 100 300
Crude Oil Production (106 t) 34.09 40 45 50
Natural Gas Production (106m3)* 11172 24450 33950 43450
Coal Production (106 t) 200.89 331.41 640.47 1237.75
Lignite Production (106 t) 12.85 25.00 45.00 60.00

* Natural gas production is net of flaring

Table 22: Net Imports of Primary Energy (1015 J)

Source 1989-90 1999-00 2009-10 2019-20
BAU EFF ENV BAU EFF ENV BAU EFF ENV
Coal 126 630 -113 -511 1330 -1158 -2421 1995 -2717 -5343
Crude Oil 845 1733 1733 1733 4550 4550 4550 78007.67.677777 7800 7800
Pet. Prod. 170 670 415 291 1634 559 264 7513 3932 3334
Electricity 7 7 7 7 7 7 7 7 7 7
Total 1146 3040 2042 1520 7521 3958 2400 17315 9023 5798

Table 23: Net Imports of Primary Commercial Energy - Modified Scenario (1015 J)

Source 1989-90 1999-00 2009-10 2019-20
Coal 126 630 293 293 1330 440 440 1995 586 586
Crude Oil 845 1733 1733 1733 4550 4550 4550 78007.67.677777 7800 7800
Pet. Prod. 170 670 415 291 1634 559 264 7513 3932 3334
Electricity 7 7 7 7 7 7 7 7 7 7
Total 1146 3040 2448 2324 7521 5556 5261 17315 12325 11727

Table 24: Value of Net Imports of Primary Commercial Energy (106 US $)

Source 1989- 1999-00 2009-10 2019-20
90
Coal 243.0 1116 519 519 2356 779 779 3534 1038 1038



Crude Oil 2456.2 5040 5040 5040 13232 13232 13232 226847.67.67777722 22684 22684
Pet. 936.5 3172 1965 1378 7736 2646 1250 35568 18615 15784
Prod.
Electricity 38.9 57 57 57 57 57 57 57 57 57
Total 3674.6 9385 7581 6994 23381 16714 15318 61843 42394 39563

Table 25: Requirement of Gross Electricity Generation (GWh)

1989-90 1999-00 2009-10 2019-20
BAU Scenario 268664 577638 1135858 2138470
EFF Scenario 268664 511184 972219 1914991
ENV Scenario 268664 475329 856360 1669443

Table 26: Results for Electricity Sector Based on Cost and Emissions Ranking (Year 2019-20)

BAU EFF ENV1 ENV2 AHD
Gross Generation Req. (GWh) 2138470 1914991 1669443 1669443 1669443
Savings in Gross Generation (GWh) - 223479 469027 469027 469027
Capacity Required (MW) 384145 338750 297530 330870 341260
Savings in Capacity Required (MW) - 45395 86615 53275 42885
Total Cost (109 US $) * 867 772 696 836 881
Savings in Cost (109US $) * - 95 171 31 (-)14
Cost/KWh (US Cents) * 6.77 6.79 6.84 7.25 7.41
CO2 Emissions (106 t) 1886.8 1666.2 1420.8 1200.6 1112.2

CO2 emissions (gms/KWh) 864.0 870.0 851.1 719.2 666.2

Share of Steam Generation (%) 82.5 80.6 77.8 64.6 59.3
Share of Hydel Generation (%) 6.4 7.2 8.2 21.2 26.5
Requirement of Coal (106 t) 1175 1029 865 718 659

* Excluding the cost of Nuclear option.

Summary

The paper provides an overview of the energy sector development in India during the last fifty years
and the likely energy scenario in the year 2020. The initial part of the paper gives a comprehensive
picture of the progress made in creation of the energy supply infrastructure, the changes in sectoral
energy consumption pattern and the energy-economy relationship as evolved over time. The long term
projections of energy demand are made using a spread sheet based model. The model essentially
follows the DEFENDUS approach as developed by Prof. A.K.N. Reddy and his associates but with
suitable modifications made by the authors in regard to the methodology of projection of energy
demand for different sectors. The scope of the present paper encompasses building up of energy
demand scenarios for different sectors of the economy under various assumptions of changing patterns
of energy use, efficiency improvements, inter-fuel substitution, satisfaction of energy demand for energy
services, etc.. The study is centered primarily around three scenarios; Business as Usual (BAU),



Efficiency-Oriented Scenario (EFF) and Environmentally Constrained Scenario (ENV). The projections
under each Scenario take into account the overall availability of resources and the likely growth in the
demand for energy in the economy. While BAU denotes a Scenario based on the existing trends in the
energy sector, EFF considers the scope for reduction in the energy intensity of the economy, based on
end-use efficiency, inter-fuel substitution and other demand management measures. In the ENV
Scenario, the emphasis is on minimising the adverse environmental implications of the energy system
under different sets of assumption. The various implications arising out of the energy demand
projections in the three scenarios have been discussed. The paper also attempts to estimate the costs
and benefits of renewable energy development by analysing the implications of exploitation of hydel
power potential in the overall context of power sector development needs arising out of the demand for
power as projected in the three scenarios for the year 2019-20.

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